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Debt

12 Months Ended

Mar. 31, 2020

Total debt of the Company, excluding film obligations and production loans, was as follows as of March 31, 2020 and March 31, 2019:



	March 31, 2020			March 31, 2019
	(Amounts in millions)
Corporate debt:
Revolving credit facility	$	—		$	—
Term Loan A	712.5			750.0
Term Loan B	965.1			1,107.5
5.875% Senior Notes	518.7			520.0
6.375% Senior Notes	545.6			550.0
Total corporate debt	2,741.9			2,927.5
Finance lease obligations	42.4			45.4
Total debt	2,784.3			2,972.9
Unamortized debt issuance costs, net of fair value adjustment on finance lease obligations	(51.3		)	(68.5		)
Total debt, net	2,733.0			2,904.4
Less current portion	(68.6		)	(53.6		)
Non-current portion of debt	$	2,664.4		$	2,850.8

The following table sets forth future annual contractual principal payment commitments of debt as of March 31, 2020:



	Maturity Date	Year Ending March 31,
Debt Type	Maturity Date	2021		2022		2023		2024		2025		Thereafter		Total
		(Amounts in millions)
Revolving Credit Facility	March 2023	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Term Loan A	March 2023	52.5		75.0		585.0		—		—		—		712.5
Term Loan B	March 2025	12.5		12.5		12.5		12.5		915.1		—		965.1
5.875% Senior Notes	November 2024	—		—		—		—		518.7		—		518.7
6.375% Senior Notes	February 2024	—		—		—		545.6		—		—		545.6
Finance lease obligations	Various	3.0		0.9		0.9		1.0		1.0		35.6		42.4
		$	68.0	$	88.4	$	598.4	$	559.1	$	1,434.8	$	35.6	2,784.3
Less aggregate unamortized debt issuance costs, net of fair value adjustment on finance lease obligations														(51.3		)
														$	2,733.0

Senior Credit Facilities (Revolving Credit Facility, Term Loan A and Term Loan B)

Revolving Credit Facility Availability of Funds & Commitment Fee. The revolving credit facility provides for borrowings and letters of credit up to an aggregate of $1.5 billion, and at March 31, 2020 there was $1.5 billion available. However, borrowing levels are subject to certain financial covenants as discussed below. There were no letters of credit outstanding at March 31, 2020. The Company is required to pay a quarterly commitment fee on the revolving credit facility of 0.250% to 0.375% per annum, depending on the achievement of certain leverage ratios, as defined in the credit and guarantee agreement dated December 8, 2016, as amended (the "Amended Credit Agreement"), on the total revolving credit facility of $1.5 billion less the amount drawn.

Maturity Date:

•Revolving Credit Facility & Term Loan A: March 22, 2023.

•Term Loan B: March 24, 2025.

Interest:

•

Revolving Credit Facility & Term Loan A: The Revolving Credit Facility and Term Loan A bear interest at a rate per annum equal to LIBOR plus 1.75% (or an alternative base rate plus 0.75%) margin, with a LIBOR floor of zero. The margin is subject to potential increases of up to 50 basis points (two (2) increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Amended Credit Agreement (effective interest rate of 2.74% as of March 31, 2020, before the impact of interest rate swaps, see Note 19 for interest rate swaps).


•	Term Loan B: The Term Loan B bears interest at a rate per annum equal to LIBOR plus 2.25% margin, with a LIBOR floor of zero (or an alternative base rate plus 1.25% margin) (effective interest rate of 3.24% as of March 31, 2020, before the impact of interest rate swaps, see Note 19 for interest rate swaps).

Potential Impact of LIBOR Transition

The Chief Executive of the U.K. Financial Conduct Authority (the “FCA”), which regulates the London Interbank Offered Rate, or LIBOR, has announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. That announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. Moreover, it is possible that LIBOR will be discontinued or modified prior to 2021.

Under the terms of the Company's Amended Credit Agreement, in the event of the discontinuance of the LIBOR Rate, a mutually agreed-upon alternate benchmark rate will be established to replace the LIBOR Rate. The Company and Lenders (as defined in the Amended Credit Agreement) shall, in good faith, endeavor to establish an alternate benchmark rate that gives due consideration to prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and which places the Lenders and the Company in the same economic position that existed immediately prior to the discontinuation of the LIBOR Rate. The Company does not anticipate that the discontinuance or modification of the LIBOR Rate will materially impact its liquidity or financial position.

Required Principal Payments:


•	Term Loan A: Quarterly principal payments, at quarterly rates of 1.25% beginning June 30, 2019, 1.75% beginning June 30, 2020, and 2.50% beginning June 30, 2021 through December 31, 2022, with the balance payable at maturity.


•	Term Loan B: Quarterly principal payments, at a quarterly rate of 0.25%, with the balance payable at maturity.

The Term Loan A and Term Loan B also require mandatory prepayments in connection with certain asset sales, subject to certain significant exceptions, and the Term Loan B is subject to additional mandatory repayment from specified percentages of excess cash flow, as defined in the Amended Credit Agreement.

Optional Prepayment:


•	Revolving Credit Facility & Term Loan A: The Company may voluntarily prepay the Revolving Credit Facility and Term Loan A at any time without premium or penalty.


•	Term Loan B: The Company may voluntarily prepay the Term Loan B at any time.

Security. The Senior Credit Facilities are guaranteed by the Guarantors (as defined in the Amended Credit Agreement) and are secured by a security interest in substantially all of the assets of Lionsgate and the Guarantors (as defined in the Amended Credit Agreement), subject to certain exceptions.

Covenants. The Senior Credit Facilities contain representations and warranties, events of default and affirmative and negative covenants that are customary for similar financings and which include, among other things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person. In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly. As of March 31, 2020, the Company was in compliance with all applicable covenants.

Change in Control. The Company may also be subject to an event of default upon a change in control (as defined in the Credit Agreement) which, among other things, includes a person or group acquiring ownership or control in excess of 50% of the Company’s common shares.

5.875% Senior Notes and 6.375% Senior Notes

Interest:


•	5.875% Senior Notes: Bears interest at 5.875% annually (payable semi-annually on May and November 1 of each year).


•	6.375% Senior Notes: Bears interest at 6.375% annually (payable semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2019).

Maturity Date:


•	5.875% Senior Notes: November 1, 2024.


•	6.375% Senior Notes: February 1, 2024.

Optional Redemption:


•	5.875% Senior Notes:


(i)	Redeemable by the Company, in whole or in part, at the redemption prices set forth as follows (as a percentage of the principal amount redeemed), plus accrued and unpaid interest to the redemption date: (i) on or after November 1, 2019 - 104.406%; (ii) on or after November 1, 2020 - 102.938%; (iii) on or after November 1, 2021 - 101.439%; and (iv) on or after November 1, 2022 - 100%.


•	6.375% Senior Notes:

(i)

Prior to February 1, 2021, the 6.375% Senior Notes are redeemable under certain circumstances (as defined in the indenture governing the 6.375% Senior Notes), in whole at any time, or in part from time to time, at a price equal to 100% of the principal amount of the Notes to be redeemed plus the Applicable Premium. The Applicable Premium is the greater of (i) 1.0% of the principal amount redeemed and (ii) the excess of the present value of the redemption amount at February 1, 2021 (see redemption prices below) of the notes redeemed plus interest through February 1, 2021 (discounted at the treasury rate on the redemption date plus 50 basis points) over the principal amount of the notes redeemed on the redemption date.


(ii)	On and after February 1, 2021, redeemable by the Company, in whole or in part, at the redemption prices set forth as follows (as a percentage of the principal amount redeemed), plus accrued and unpaid interest to the redemption date: (i) on or after February 1, 2021 - 103.188%; (ii) on or after February 1, 2022 - 101.594%; (iii) on or after February 1, 2023 - 100%.

Security. The 5.875% Senior Notes and 6.375% Senior Notes are unsubordinated, unsecured obligations of the Company.

Covenants. The 5.875% Senior Notes and 6.375% Senior Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations. As of March 31, 2020, the Company was in compliance with all applicable covenants.

Change in Control. The occurrence of a change of control will be a triggering event requiring the Company to offer to purchase from holders all of the 5.875% Senior Notes and 6.375% Senior Notes, at a price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. In addition, certain asset dispositions will be triggering events that may require the Company to use the excess proceeds from such dispositions to make an offer to purchase the 5.875% Senior Notes and 6.375% Senior Notes at 100% of their principal amount, plus accrued and unpaid interest, if any to the date of purchase.

Capacity to Pay Dividends

At March 31, 2020, the capacity to pay dividends under the Senior Credit Facilities, the 5.875% Senior Notes and the 6.375% Senior Notes significantly exceeded the amount of the Company's accumulated deficit or net loss, and therefore the Company's net loss of $206.4 million and accumulated deficit of $16.9 million were deemed free of restrictions at March 31, 2020.

Debt Transactions

Fiscal 2020:

Senior Notes Repurchases. During the year ended March 31, 2020, the Company paid $1.0 million to repurchase $1.3 million principal amount of the 5.875% Senior Notes, and the Company paid $3.5 million to repurchase $4.4 million principal amount of the 6.375% Senior Notes.

Term Loan B Repurchases. During the year ended March 31, 2020, the Company paid $22.0 million to repurchase $28.0 million principal amount of the Term Loan B.

Term Loan Prepayments. During the year ended March 31, 2020, the Company made voluntary prepayments totaling $101.9 million in principal outstanding under the Term Loan B, together with accrued and unpaid interest.

Fiscal 2019:

6.375% Senior Notes Issuance. On February 4, 2019, the Company issued $550.0 million aggregate principal amount of 6.375% Senior Notes. The Company used the proceeds of the 6.375% Senior Notes to pay down outstanding amounts under its Revolving Credit Facility and for working capital purposes.

Convertible Senior Subordinated Notes Repayment. On April 15, 2018, the 1.25% convertible senior subordinated notes due April 2018 (the "April 2013 1.25% Notes") matured, and upon maturity, the Company repaid the outstanding principal amount, together with accrued and unpaid interest.

Term Loan Prepayments. During the year ended March 31, 2019, the Company made voluntary prepayments totaling $130.0 million in principal outstanding under the Term Loan B, together with accrued and unpaid interest.

Fiscal 2018:

March 2018 Senior Credit Facilities Refinancing. On March 22, 2018, the Company entered into an amendment to the credit and guarantee agreement dated December 8, 2016 to refinance its revolving credit facility, Term Loan A and Term Loan B. In connection with the amendment, the Company repaid in full the then outstanding principal amounts of $950.0 million under the previous Term Loan A and $825.0 million under the previous Term Loan B, and terminated all commitments under the previous revolving credit facility, and the Company incurred a new five-year Term Loan A in aggregate principal amount of $750.0 million, incurred a new seven-year Term Loan B in aggregate principal amount of $1,250.0 million, and obtained a new $1.5 billion five-year revolving credit facility (together with the Term Loan A and Term Loan B, the "Senior Credit Facilities").

December 2017 Term Loan B Refinancing. On December 11, 2017, the Company entered into an amendment to the credit and guarantee agreement dated December 8, 2016 to reduce the interest rate on the Term Loan B and prepaid $25.0 million of principal outstanding under the previous Term Loan B.

Term Loan Prepayments. In addition to the prepayments in connection with the amendments described above, during the year ended March 31, 2018, the Company made other voluntary prepayments totaling $740.0 million in principal outstanding under the previous Term Loan B, together with accrued and unpaid interest.

Gain (Loss) on Extinguishment of Debt

During the years ended March 31, 2020 and 2019, the Company recorded a gain (loss) on extinguishment of debt related to the transactions discussed above, as presented below:



	Year Ended March 31,
	2020			2019
Gain (loss) on extinguishment of debt:
Senior Notes repurchases	$	1.1		$	—
Term Loan B repurchases	5.7			—
Term Loan B prepayments	(1.4		)	(1.9		)
	$	5.4		$	(1.9	)

During the year ended March 31, 2018, the Company recorded a loss on extinguishment of debt associated with the debt refinancing transactions in fiscal 2018, as discussed above. The following table summarizes the accounting for the debt issuance costs incurred and the related loss on extinguishment of debt recorded:



	Year Ended March 31, 2018
	Loss on Extinguishment of Debt		Capitalized & Amortized Over Life of New Issuances		Total
	(Amounts in millions)

New debt issuance costs	$	11.0	$	11.6	$	22.6
Previously incurred debt issuance costs or unamortized discount	24.7
Total	$	35.7

Finance Lease Obligations

Finance lease obligations represent lease agreements acquired in the Starz Merger. As of March 31, 2020, these obligations include a ten-year commercial lease for a building, with four successive five-year renewal periods at the Company's option, with an imputed annual interest rate of 6.39%, and a finance lease obligation for Starz's transponder capacity that expires in February 2021 and has an imputed annual interest rate of 7.0%. See Note 8 for further information.